Netflix has once again adjusted its pricing model, an announcement that came alongside its latest earnings report on Tuesday (PDF version). This marks a significant moment for subscribers in the US, Canada, Portugal, and Argentina, who will now face higher costs across most of the service’s subscription tiers starting from their next billing cycle.

The price hike breakdown:

• Standard with ads: This option, which includes advertisements, will see a modest increase from $6.99 to $7.99 per month.
• Standard (ad-free): The most popular choice for many, this plan is jumping from $15.49 to $17.99 per month, reflecting a $2.50 increase.
• Premium: For those seeking the highest quality streaming with 4K and HDR support, this plan will now cost $24.99, up from $22.99.

MoMo Zhou, a Netflix spokesperson, confirmed these changes, emphasizing that while the price adjustments are significant, they reflect the company’s ongoing commitment to enhancing content and service quality. “As we continue to invest in programming and deliver more value for our members, we will occasionally ask our members to pay a little more so that we can re-invest to further improve Netflix,” Zhou stated.

This move follows Netflix’s last price increase in October 2023, but it’s noteworthy that this is the first time the ad-supported tier, introduced in 2022, has seen a price hike. This change might reflect the increasing costs of content acquisition and production, as well as the platform’s growing reliance on advertising revenue.

Despite the price adjustments, Netflix has been on an upward trajectory in subscriber numbers. The platform welcomed 19 million new subscribers in the last quarter, setting a new record and pushing its global user base to 300 million. This surge comes at a time when Netflix has decided to pivot from quarterly subscriber reporting to only announcing “major subscriber milestones.” This shift was communicated last year, indicating a strategic move towards focusing on other metrics like engagement and revenue.

Financially, Netflix is performing robustly, with its operating income surpassing $10 billion for the first time. This financial health is underscored by the company’s belief in continued growth potential. According to their investor letter, Netflix still captures less than 10 percent of total TV viewing time in its operational markets, suggesting significant room for expansion, especially as streaming becomes more prevalent globally.

New features and plans

In addition to the price adjustments, Netflix unveiled a new “Extra Member with Ads” plan. This initiative allows users with an ad-supported subscription to add an extra member outside their household for an additional fee, mirroring the $7.99 charge for adding an external member on an ad-free plan. This move could be seen as an attempt to further monetize its user base while accommodating the trend towards shared accounts, albeit within controlled, monetized parameters.

The price increase has broader implications for the streaming market. As one of the pioneers of streaming, Netflix’s pricing strategy often sets the tone for competitors like Disney+, Max (formerly HBO Max), and Amazon Prime Video. The decision to hike prices might push other services to follow suit or might encourage subscribers to reevaluate their streaming budgets or explore alternatives, including free, ad-supported platforms or bundled services that offer more value.